High Short Interest - Good Or Bad For Stocks?

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Is it bad for future performance if the short interest is high? Shorting became a hot topic in 2021 when Gamestop made short-sellers run for cover at prices many times higher than their entry price. But was the short squeeze in Gamestop an outlier? Which stocks perform better - stocks with high or low short interest?

The empirical evidence suggests that stocks with high short interest perform worse than stocks that have little short interest. Thus, short squeezes like happened in Gamestop are not the norm - they are outliers.

Thus, it’s not a good idea to buy stocks with high short interest. Read more in is high short interest good or bad?